2014 WAIRC 00020
WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION
CITATION:2014 WAIRC 00020
CORAM / :Commissioner S J KennerHEARD / : / Tuesday, 24 September 2013
DELIVERED:MONDAY, 20 JANUARY 2014
FILE NO.:B 66 OF 2013
BETWEEN / : / Amy Linetta FergusonApplicant
AND
TNT Australia Pty Ltd (41 000 495 269)
Respondent
Catchwords:Industrial law – Contractual benefits claim – Commission and Bonus Scheme – Claim for commission payments – Letter of offer and checklist of attachments – Express incorporation and the words “abide by” – Entire agreement clause – Exclusion clause – Implied terms – Mutual trust and confidence – Duty of cooperation – Variation to the contract – Notice – Consideration – Managerial discretion – Principles applied – Circumstances, context and intention – Construction of the Scheme – Scheme did not have contractual effect – Application dismissed
Legislation:Industrial Relations Act 1979 (WA) ss 7, 29(1)(b)(ii)
Result:Application dismissed
Representation:
Counsel:
Applicant:Mr S Ferguson of counsel
Respondent:Mr N Furland of counsel
Case(s) referred to in reasons:
Australian Broadcasting Commission v Australasian Performing Right Association Limited (1973)129CLR99
Balfour v Travelstrength Limited (1980)60WAIG1015
Barker v Commonwealth Bank of Australia (2012) 296 ALR 706
BP Refinery (Westernport) Pty Limited v President, Councillors and Ratepayers of the Shire of Hastings (1977) 180 CLR 266
Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149CLR337
Commonwealth Bank of Australia v Barker(2013) 214 FCR 450
Con-Stan Industries of Australia Proprietary Limited v Norwich Winterthur Insurance (Australia) Limited (1986)160CLR226
F.A. Tamplin Steamship Company, Limited v AngloMexican Petroleum Products Company, Limited [1916]2AC397
GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1
Goldman Sachs JBWere Services Pty Limited v Nikolich [2007] FCAFC 120
Hotcopper Australia Ltd v Saab (2001)81WAIG2704
MacDonald v Shinko Australia Pty Ltd [1999] 2QdR152
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451
Perth Finishing College Pty Ltd v Watts (1989) 69 WAIG 2307
Riverwood International Australia Pty Ltd v McCormick (2000) 177 ALR 193
Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165
Wigan v Edwards (1973) 47 ALJR 586
Yousif v Commonwealth Bank of Australia (2010) 193 IR 212
Case(s) also cited:
Ahern v The Australian Federation of Totally and Permanently Incapacitated Ex-Service Men and Women (Western Australian Branch) Inc [2000] WASCA 80
Ajax Cooke Pty Ltd v Nugent (1993) 5 VIR 551
Akmeemana v Murray (2009) 190 IR 66
Al-Safin v Circuit City Stores Inc. (2005) 394 F 3d 1254
Anderson v Douglas & Lomason Company (1995) 540 NW 2d 277
Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147
Barry Bainbridge v Circuit Foil UK Ltd [1997] EWCA Civ 1016
Bauman v Hulton Press Ltd [1952] 2 All ER 1121
Bekker NO v Total South Africa (Pty) Ltd [1990] 3 SA 159
Belo Fisheries v Froggett (1983) 63 WAIG 2394
Bostik (Australia) Pty Ltd v Gorgevski (No 1) (1992) 36 FCR 20
Buckland v Bournemouth University Higher Education Corporation [2011] QB 323
Byrne v Australian Airlines Ltd (1995) 185 CLR 410
Cadoux v Central Regional Council [1986] IRLR 131
Clark v Nomura International Plc [2000] IRLR 766
Cohen v Clean Image Cleaning Services WA [2012] WAIRC 00713
Commissioner of Taxation of the Commonwealth of Australia v Sara Lee Household & Body Care (Australia) Pty Ltd (2000) 201 CLR 520
Concut Pty Ltd v Worrell (2000) 176 ALR 693
Construction, Forestry, Mining and Energy Union v HWE Mining Pty Ltd [2011] FWA 8288
Cordiant Communications (Australia) Pty Ltd v Communications Group Holdings Pty Ltd [2005] NSWSC 1005
Criniti v Scott Turner - Vip Publishers and Adconnect Local Marketing [2011] WAIRC 937
Davis v Blaxland Pty Ltd (2002) 82WAIG475
Derksen v Wasa Insurance Co (1994) 4 BCLR 3d 73
Dietrich v Dare (1980) 30 ALR 407
Eley v Potato Marketing Corporation of Western Australia (2013) 93 WAIG 213
Eshuys v St Barbara Ltd [2011] VSC 125
EzishopNet Ltd (in liq) v Veremu Pty Ltd [2003] NSWSC 156
French v Barclays Bank Plc [1998] IRLR 646
Hall v Busst (1960) 104 CLR 206
Hanson v Royden (1867) LR 3 CP 47
Hart v Macdonald (1910) 10 CLR 417
Hartley v Cummings (1847) 5 Comb 247
Hartley v Ponsonby (1857) 119 ER 1471
Hawkins v Clayton (1988) 164 CLR 535
Hilton v Shiner Builders Merchants [2001] IRLR 727
Horkulak v Cantor Fitzgerald International [2005] ICR 402
Horwood v Millar's Timber & Trading Co Ltd [1917] 1 KB 305
Jackson v Iustini Holdings Trading As Doors Plus (2001) 81 WAIG 1215
Johnson v Unisys Ltd [2003] 1 AC 518
Knight v Alinta Gas Ltd (2002) 82 WAIG 2392
Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd [2008] NSWCA 5
La Rosa v Nudrill Pty Ltd [2013] WASCA 18
Larkin v Boral Construction Materials Group Ltd (2003) 83 WAIG 929
Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60
Lloyd's Bank Ltd v Cooke [1907] 1 KB 794
Maier v E & B Exploration Ltd [1986] 4 WWR 275
Malik v Bank of Credit and Commerce International SA [1998] AC 20
Manufacturers' Mutual Insurance Ltd v Withers (1988) 5 ANZ Ins Cas 60
Matthews v Cool Or Cosy Pty Ltd (2004) 84 WAIG 2125
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457
McDonald v Parnell Laboratories (Aust) Pty Ltd [2007] FCA 1903
McRae v Commonwealth Disposals Commission (1951) 84 CLR 377
Miles v Brendon Penn Nominees Pty Ltd [2006] WAIRC 05752
Moschi v Lep Air Services Ltd [1973] AC 331
Mouritz v Hegedus [1999] WASCA 1061
Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197
Onuoha v PEP Community Services Inc [2011] WAIRC 00402
Pemberton v Civil Service Insurance (2009) 89 WAIG 538
Ramsey v Annesley College [2013] SASC 72
Rankin v Scott Fell & Co (1904) 2 CLR 164
Re London Celluloid Co (1888) 39 Ch D 190
Reynolds v Southcorp Wines Pty Ltd (2002) 122 FCR 301
Rose v TJ & LK Cattle (2012) 92 WAIG 1797
Salomon v Brownfield (1896) 12 TLR 239
Scally v Southern Health & Social Services Board [1992] 1 AC 294
Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 357
Sterling Commerce (Australia) Pty Ltd v Iliff [2008] FCA 702
Stilk v Myrick (1809) 2Camp 317
Stylianou v Country Realty Pty Ltd As Trustee for the Marcelli Family Trust (2010)91WAIG2028
Sullivan v Janvay Pty Ltd trading as Harvey World Travel, Fremantle (1998) 78 WAIG 3583
Sydney City Council v West (1965) 114 CLR 481
Taylor v Laird (1856) 1 H & N 266
The Australian Rail Tram and Bus Industry Union of Employees West Australian Branch v Public Transport Authority (2005) 85 WAIG 1604
Trimboli v Cusma Corporation Pty Ltd t/as Cusma Property Consultants [2003] WAIRC 8020
Vodafone Pacific Ltd v Mobile Innovations Ltd [2004] NSWCA 15
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
Wandsworth London Borough Council v D'Silva [1998] IRLR 193
Waroona Contracting v Usher (1984) 64 WAIG 1500
Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45
Whitwood Chemical Co v Hardman [1891] 2 Ch 416
Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522
Williams v Roffey Brothers & Nicholls (Contractors) Ltd [1991] 1 QB 1
World Best Holdings Ltd v Sarker [2010] NSWCA 24
Young v Canadian Northern Railway Company [1931] AC 83
Reasons for Decision
1MsFerguson was employed by TNTAustralia Pty Ltd in May2010 as a FieldSales Executive. TNT is a national company engaged in the business of freight and transport services. MsFerguson was based in the Perth office of TNT. In her position, she was responsible for the sales of TNT services to existing and new clients. MsFerguson was employed under a written contract of employment. In addition to her base remuneration, MsFerguson participated in a Commission and Bonus Scheme. It is this Scheme which is controversial in these proceedings.
2MsFerguson resigned from her employment on 1March 2013, by the giving of fourweeks’ notice in accordance with her contract of employment. MsFerguson sought clarification of her entitlements under the Scheme, for commission payments for January, February and March 2013, following the tendering of her resignation. MsFerguson was informed by TNTmanagement that she had no entitlement under the Scheme to payments of commission, because her employment was terminating at the end of March 2013. MsFerguson disputed this. She claims under the Scheme she is owed some $5,000, despite her resignation. TNTdisagrees. It says it does not owe MsFerguson any commission payments under the Scheme, because its terms provide that no commission is payable when a person ceases employment with the company.
3MsFerguson has now brought the present claim, alleging that TNThas denied her, as a contractual benefit, payments under the Scheme. Two principal issues need to be determined in this matter. They are:
(a)Did the Scheme have contractual effect, either on the basis of express incorporation of its terms or were its terms implied into Ms Ferguson’s contract?
(b)If the Scheme did have contractual effect, on a proper construction of its terms, did the Scheme give rise to an entitlement on the facts?
4There were a number of subsidiary arguments put by MsFerguson and TNT. These issues will be separately identified and dealt with.
Factual setting
5Affidavits were filed by MsFerguson and MrGodbier, TNT’s General Manager Sales. MsFerguson testified that her offer of employment was contained in a letter from TNTdated 13May 2010. The offer letter was detailed and ran to some seven pages. It had annexed to it a document entitled “Checklist of Attachments”, setting out various policies and procedures of the company. Asecond attachment to the letter of offer was a job description for MsFerguson’s position.
6Formal parts omitted, relevant parts of the letter were as follows. At the commencement, the first two paragraphs provided:
I am pleased to formally offer you the position of Field Sales Executive with TNTAustralia Pty Limited (Company), commencing on 17May 2010.
Should you accept this offer, the terms and conditions of your employment will be as follows:
7Under the heading “Duties”, the final paragraph was in the following terms:
The terms set out in this letter will continue to govern your employment with the Company despite any changes from time to time to your position, duties and responsibilities, remuneration, working hours or employment location unless otherwise agreed in writing.
8For present purposes, the most controversial part of the letter appears under a heading “Policies and Procedures”. The two paragraphs under this heading read as follows:
You agree to abide by all policies and procedures of the Company as replaced, amended or varied from time to time, including but not limited to the policies and procedures attached to this letter. However, the policies and procedures of the Company referred to in this clause and elsewhere in this letter are not incorporated into this letter.
You must familiarise yourself with these policies and procedures, including the policies and procedures attached and verify acknowledgement by signing the attached checklist confirming you have read and understood the policies and procedures.
9At the end of the letter was a heading “Previous understandings and agreements” and the paragraph under it said as follows:
This letter, which includes the attached position description:
(a)constitutes the whole of the terms and conditions of your contract of employment with the Company; and
(b)supersedes all previous agreements, arrangements, understandings or representations in relation to your employment with the Company.
10In the acceptance section of the letter, appeared the words:
I have read and accept employment with TNTAustralia Pty Limited on the terms and conditions set out in this letter.
11There follows the name and signature of MsFerguson (by her maiden name) which is dated 17May 2010.
12It was common ground that the Scheme was not one of the policies and procedures listed on the checklist of attachments attached to MsFerguson’s letter of appointment. MsFerguson sought to make something of this in her submissions, and I will return to this issue later in these reasons. MsFerguson testified that she was given a copy of the documents referred to in the list with the letter of offer and she said she read them. She also acknowledged this by her signature accepting the offer of employment.
13Once employed, MsFerguson testified that she earned commissions, payable monthly, under the Scheme. There was a three month time lag between a claim being made under the Scheme for a commission payment, and a payment being made.The Scheme was reviewed and updated regularly. Attached to MsFerguson’s affidavit, were versions of the Scheme in place in 2010, 2011 and the most recent version as at the time she resigned from her employment, for 2013. MsFerguson testified that the commission payments she received under the Scheme, for both new business and existing customer sales, formed a substantial portion of her total income.
14At the beginning of each year, Ms Ferguson said she received a letter from MrGodbier, setting out her sales targets for that year. A letter of 1February2011 also referred to the updated version of the Scheme, which was available on the TNTintranet. MrGodbier testified that a full copy of the Scheme was available for all employees to view on the TNTintranet, and which was easily accessed by staff. He also referred to the requirement for all employees to remain familiar with the Scheme and its various updates.
15As noted, on 1March2013, MsFerguson resigned from the company. She testified that she was not clear as to her entitlements under the Scheme on her resignation. Relevantly, cl8 of the Scheme, under the heading “General Rules for Participants”, in the 2013versionprovided as follows:
8.0 GENERAL RULES FOR PARTICIPANTS
To be eligible for payment of commission/bonus, a member of the scheme must:
8.0.1Be fully employed by one ofthe following companies (each referred to as a 'Member Company'):
TNT Australia Pty Limited
Riteway Transport Pty Limited
TNT Express Worldwide (NZ) Pty Limited
TNT Express Worldwide Pty Limited
for the duration of the period of the claim.
8.0.2Have been in full time employment with a 'Member Company' referred to in clause 8.0.1 for four weeks prior to the first date of any claim and be assigned to a territory.
8.0.3No consideration will be given to any request for consequential claims by members of the scheme. The liability of each 'Member Company' referred to in clause 8.0.1 to its respective members is restricted to the period during which a member of the scheme was fully employed by such 'Member Company', with no consideration as to future value after the final date of employment. For the avoidance of doubt and notwithstanding any other provision in this document, no payments of any type under this Scheme will be paid to a member of the scheme after the termination of the member's employment.(My emphasis)
8.0.4Have met the criteria for payment as defined in the rules of New Business Bonus and Commission scheme.
8.0.5New business eligibility is conditional upon the first trade as specified in Section 3. This means that if a sales person leaves/is redeployed and an account has been signed but not traded, then there is no eligibility for commission for that customer.
8.0.6If a sales person is redeployed within the Sales Department in a selling role, then entitlement to New Business Commission will run its course until the expiration of the 12month eligibility period. This includes moving to Time Critical and Failsafe in a selling role.
8.0.7If a Manager receiving commission based on their Team's performance moves to a selling role, any New Business Ongoing Commission is forfeited.
8.0.8If a sales person is redeployed within TNT, but to a different department or country, New Business commission ceases to be an entitlement.
8.0.9New Business Commission will be paid up until the last week of employment for eligible Salespersonnel who have resigned from TNT. Such payments will be paid with normal monthly payrollsubject to clause 8.0.3 above and not as a lump sum on the last day of employment with TNT.
8.0.10In the case of Maternity and Paternity Leave, New Business Commission is payable up until the lastday at work. If the person on Maternity/Paternity Leave starts work again within the 12monthNew Business commission payment period, then commission is payable from the date that theperson recommences work (not retrospectively) up until the 12 month commission eligibilityperiod expires.
8.0.11All monetary amounts in this document are in the local currency (ie AU$,NZ$ or FJ$) relevant tothe country in which scheme participant receiving the payment resides.
16MsFerguson said she spoke to her manager about the matter, and in turn, the TNThead office. On 17March 2013, the TNTDirector Sales and Marketing, confirmed that under cls3.6.7, 8.0.3 and 8.0.9 of the Scheme, no payments were made to employees following the termination of their employment. MrGodbier in his testimony confirmed that this had been the longstanding practice of the company. He said that an employee must be actually employed to receive a “New Business Commission” under the Scheme. MrGodbier said that claims by employees for payment of commission after their employment had ended, are not paid. This includes claims based on revenue received by TNT, at a time when the person was still employed.
17In relation to cl8 of the Scheme, MrGodbier testified that following a claim by an employee for commission payments after their employment had ended cl8.0.3 was changed to reflect the current provision. He said that this was done so it would be completely clear to employees, that no payment under the Scheme of any type, are payable after termination of employment.
18Further, MsFerguson suggested that neither she nor those in the Perth office of the company were aware of the changes to cl8 made in 2011, and MsFerguson submitted, this was deliberate. This was denied by TNT. MrGodbier said amendments to the Scheme were noted in the “Amendment Detail” table at the back of the Scheme document. This contained a summary note of the change, which was often expressed in a generic format.
19MsFerguson maintained that at all times she considered that she should be paid for commission payments for January, February and March 2013, based on the work she had performed. She said that she was never told these amounts would be effectively forfeited, on her resignation.
Relevant legal principles
Contractual benefitsclaim
20On a claim made by an employee or a former employee under s29(1)(b)(ii) of the Act, the onus is on the applicant to establish that the benefit claimed, was one arising under their contract of employment. To establish such a claim, the claim must relate to an “industrial matter”, as set out in s7 of the Act; the claim must be made by an “employee” as defined in s7 of the Act; the benefit claimed must be a contractual benefit, as an entitlement under the contract of service; the subject contract must be a contract of service; the benefit must not arise under an award or order of the Commission; and the benefit must also have been denied: Hotcopper Australia Ltd v Saab (2001)81WAIG2704. To be “entitled”, to such a benefit, the employee or former employee must establish that the relevant benefit claimed arises under, by virtue of or pursuant to their contract of employment:Perth Finishing College Pty Ltd v Watts (1989)69WAIG2307. Furthermore, the meaning of “benefit” has been defined broadly, to include any “advantage, entitlement, right, superiority, favour, good or perquisite by the action of the employer in contravention of a provision of the contract of service”:Balfour v Travelstrength Limited(1980)60WAIG1015.